Opinion
No. C2-99-837.
Filed December 28, 1999.
Appeal from the District Court, Hennepin County, File No. 97156.
Gregg J. Cavanagh, (for appellants)
Richard A. Miller, Brendan D. Cummins, Miller O'Brien Bloom, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Minnesota Chapter of Associated Builders and Contractors, Inc., General Sprinkler Corporation, Ebert Hinson Fire Protection, Inc., Willmar Electric Service, Inc., Protouch Painting, Inc., George W. Hawkins, and Blaine M. Johnson (collectively ABC) appeal the district court's denial of their summary judgment motion and the dismissal of their complaint with prejudice. We affirm.
FACTS
In April 1996, the voters of the Minnetonka Independent School District No. 276 passed a referendum providing funding for various renovations and additions to the middle schools and the high school in the district. In June 1996, the School District retained Stahl Construction Company to serve as the construction manager on the projects.
The projects entailed extensive construction, and it was important to the School District to get the work accomplished quickly and efficiently so as to minimize the disruption to the school and students. The projects were broken down into phases, and the first phase had to be completed before the second phase could begin. The School District was concerned about ensuring that the work would be finished quickly and with little difficulty. The director of finance and operations for the School District estimated that any delays in the projects would cost the district several hundred thousand dollars.
During the summer of 1996, Stahl informed the School District that approximately 18 of the 27 construction trade union contracts would expire during the term of the projects. Stahl advised the School District that it should consider negotiating a project labor agreement in order to insure that there would be no delays in completing the projects. A project labor agreement (PLA) is an agreement between the owner of a construction project and a labor organization in which the owner of the project agrees to designate that organization as the exclusive bargaining agent for all employees working on the project and to employ only contractors and subcontractors who agree, for the purposes of the work on that project only, to abide by the terms of collective bargaining agreements that organization has in place, including paying union wages and contributing to the union benefits packages. In return, typically, the labor organization agrees that there will be no strikes, slowdowns, picketing, sympathy actions, or any other kind of work stoppage or disruptive action for the life of the project, even if one or more of the collective bargaining agreements should expire during the course of the project.
Several parties sued the School District, its superintendent and Board of Education, the board's chairperson, and Stahl Construction to prevent them from imposing the PLA requirement. The plaintiffs include the Minnesota Chapter of Associated Builders and Contractors (an association of contractors, suppliers and affiliates whose members frequently bid on public contracts), several companies that declined to bid on the project because of the PLA requirement, and two residents and taxpayers in the School District. Respondent Minnesota Building and Construction Trades Council, the labor organization with which the School District executed the PLA, sought and received permission to intervene in the case as a defendant. The other defendants were eventually dismissed from the case without prejudice. ABC brought a summary judgment motion seeking a permanent injunction against the use of the PLA requirement on the projects.
The district court found evidence that the School District's director of finance and operations considered the legality of the PLA in light of the competitive bidding statutes and the "lowest responsible bidder" language, concluding that the PLA would not have an anticompetitive effect because Minnesota's prevailing wage law would require contractors on the project to pay wages essentially equivalent to union wages. Therefore, the district court found that the School District acted within its discretion in adopting a PLA for the projects, denied plaintiffs' motion, and dismissed their complaint.
ISSUE
Did the trial court err in denying ABC's summary judgment motion for a permanent injunction and dismissing its complaint with prejudice?
DECISION
On an appeal from summary judgment, the reviewing court asks whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French , 460 N.W.2d 2, 4 (Minn. 1990). Thus, when the parties stipulate to the facts, we must determine whether the district court erred in applying the law. Benda v. Girard , 585 N.W.2d 422, 423 (Minn.App. 1998), affirmed, 592 N.W.2d 452 (Minn. 1999). We review the district court's interpretation of the law de novo. Sorenson v. St. Paul Ramsey Med. Ctr., 457 N.W.2d 188, 190 (Minn. 1990). Minn.R.Civ.P. 56.03
gives the court authority to enter judgment for either party, including a non-moving party, on the basis of the documents before the court when the motion is made.
Leidall v. Grinnell Mut. Reinsurance Co. , 374 N.W.2d 532, 535 (Minn.App. 1985).
ABC argues that the School District's decision to adopt the bid specification requiring successful bidders to sign a PLA violates Minnesota's competitive bidding laws. But we have recently held that a public entity may, under appropriate circumstances, adopt a PLA requirement for its public construction projects without violating those laws. Queen City Constr., Inc. v. City of Rochester , ___ N.W.2d ___, ___, No. CX-99-889, slip op. at ____ (Minn.App. Dec. ___, 1999). A bid specification requiring a successful bidder to sign a PLA is treated the same way as any other bid specification a public entity might impose, and under Minnesota law public entities have considerable discretion in fashioning such specifications:
The awarding of a contract is an administrative act of discretion vested by law in the governing authorities of the city. * * * [T]he courts cannot direct the authorities as to how they shall exercise that discretionary power, nor direct to whom they must let a contract. They may only enjoin them from doing so illegally, which must include an arbitrary, capricious, or unreasonable exercise of power.
Nielsen v. City of St. Paul , 252 Minn. 12, 18, 88 N.W.2d 853, 858 (1958); Queen City , ___ N.W.2d at ___, slip op. at ___. Because the parties have stipulated to the relevant facts, we need only examine those facts and determine whether the School District's decision to impose a PLA bid specification could constitute an arbitrary, capricious, or unreasonable exercise of power as a matter of law. Benda , 585 N.W.2d at 423 (when facts are stipulated, appellate court need only review for error of law).
Because of significant overcrowding, the School District needed to create additional educational space quickly. For the high school part of the project the School District created a two-phase plan. The first phase of the plan, including site work, remodeling the first floor and building a second floor addition, was to be completed during the summer of 1997 while students were out of school. The School District estimated that a delay of Phase I would increase the project's cost by $480,000. Furthermore, the second phase was related to the first, so that any delay in completing Phase I would cause a delay in Phase II, resulting in additional costs.
Phase II included a 117,000-square-foot addition to the high school and extensive remodeling of the remainder. The addition and some of the remodeled areas were scheduled to be completed by August 1, 1998, so that the school would be ready for opening by the first day of school on September 2. The construction schedule for Phase II was very tight, so any delay in completing the project would prevent the school from being ready for the start of school. The School District, however, could not delay the start of school. The number of students involved, as well as the fact that the School District has only one high school, meant that there would have been no viable alternative site in which to hold school. Phase II construction had to be completed on time.
We have held similar circumstances to be sufficient to justify the adoption of a PLA bid specification. In Queen City , the City of Rochester adopted a PLA bid specification in an attempt to ensure timely completion of improvements to the Mayo Civic Center. The space to be created and improved by the construction was already rented out, so if the project were not completed on time, the city would lose the revenue from those rentals, suffer a loss of reputation among convention clients, and incur additional construction costs. Queen City , ___ N.W.2d at ___, slip op. at ___. We held that the city did not abuse its discretion by adopting a PLA bid specification under those circumstances. Id . at ___, slip op. at ___.
The School District faced a similar situation. If the high school project were not completed on time, the school year would not be able to start on time and the School District would incur hundreds of thousands of dollars in additional costs. Further, the situation facing the School District could well be considered serious, because 18 of 27 relevant construction trade union contracts were scheduled to expire during the high school project, raising the prospect that one or more of the trade unions with expired contracts would strike or take some other form of disruptive and delaying labor action.
Under these circumstances, the School District's decision to impose a PLA bid restriction in an attempt to ensure that the high school project was completed on time was not "an arbitrary, capricious, or unreasonable exercise of power." Nielsen , 252 Minn. at 18, 88 N.W.2d at 858. The district court therefore did not err by implicitly granting summary judgment to the Trades Council and dismissing ABC's complaint with prejudice.
Affirmed.
I respectfully dissent. At oral argument the parties agreed that the sole basis for sustaining the trial court is that the PLA will promote harmony on the construction project and will prevent labor problems resulting in work stoppages and delay. It should first be noted that there are no facts to support these conclusions. It is common knowledge that written agreements have never guaranteed to prevent work stoppage and delay. The best efforts to do so are by the use of a reasonable surety bond.
Respondent also argues that the PLA will provide all skilled labor necessary to complete the project. There are no facts to support this proposition either. The School District evidently was aware of a lack of evidentiary facts when it failed to make any findings of fact but instead jumped to unsupported conclusions.
The first serious problem is the failure of the PLA plan to pass the "duck" test — if it looks like a duck, waddles like a duck, swims like a duck, and quacks like a duck, it's a duck.
The PLA agreement requires a nonunion employer to agree that (1) the union (a party with the School District to the PLA) is the exclusive bargaining agent for all the contractors' employees working on the project; (2) the employer must, if needed, obtain the additional employees from the union hiring hall or insure that such additional employees become dues paying members of the union; (3) refuse to employ any such employee who will not become a dues paying member of the union; (4) pay all employee wages and benefits as specified in the collective bargaining agreement and pay a wage, even if higher than the state's prevailing wage rate; (5) pay into the union fringe benefits fund for pension, health, welfare, vacation, apprenticeship, and other benefits, even if the contractor has already provided benefits to its employees and even if such employees never received any benefit from this compelled contribution; (6) comply with union requirements regarding show-up pay, overtime, and double-time pay; (7) pay, retroactively, any increases of wages or fringe benefits that the union may negotiate during the project; (8) follow union rules regarding work assignments and journeyman-apprentice ratios; (9) grant union business agents access to job sites and contractors' employees; and (10) follow union grievance and arbitration procedures and comply with the qualifications of employee applicants.
Applying the "duck" test, if it looks like a union, acts like a union, controls the terms and conditions, compensation, fringe benefits and the hiring, discipline and firing of employees, it's a union.
The second serious and fatal problem is that the employers' employees are denied federal and state right to vote on unionization of their employer and their work. The PLA provides for instant unionization without employee input by vote. The fact that the term of unionization is limited to a specific job does not overcome the inherent unfairness to the employees by allowing the union and their employer to impose a union upon them without their right to vote on that question.
The union argument that the employee may and probably will receive greater compensation than that provided by his or her employer or that the employee has a right to terminate his or her employment are not viable arguments. A union cannot buy an employee's right to vote nor can it compel an employee to give up his or her job without granting him or her the right to vote.
The PLA procedure imposes instant unionization on nonunion employees and the employer without granting the employees the right to vote. Appellants are entitled to summary judgment.